WARNING – Costly financial risk for Medicare patients

[vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_column_text]In August, President Barack Obama quietly signed the Notice of Observation Treatment and Implication for Care Eligibility Act, a law drafted and approved largely in response to a growing concern in the Medicare hospitalization process.

Since 2008, the Center for Medicare Advocacy has reported the number of Medicare beneficiaries being placed in acute care hospital beds under observation for more than one day rather than being admitted has continued to increase. Research found that most patients in these circumstances are unaware of their status until they receive a hospital bill or they have need to transition to a skilled nursing facility.

The Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE) bill was designed to mitigate the problem of observation status notification; but, many believe it falls far short of addressing the key issues faced by many Medicare patients who continue to be placed in this status by hospitals and subsequently require skilled nursing care.

According to Medicare, skilled nursing care is authorized when patients need “skilled nursing or therapy staff to manage, observe and/or evaluate their care.” Examples of such care can include but is not limited to intravenous injections and physical therapy.

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it falls far short of resolving seniors’ greatest concerns that include having the observation days count toward the three day admission requirement necessary before Medicare will cover a stay in a skilled nursing facility

[/vc_column_text][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_column_text]Medicare will only cover skilled nursing facility (SNF) care when all of the following conditions are met. A patient has Medicare Part A (hospital insurance) and has days left in his/her benefit period available to use; a doctor has ordered the inpatient services needed for SNF care; the patient gets the required skilled care on a daily basis (the services must be ones that can only be provided in a SNF on an inpatient basis); and finally, the patient has a qualifying hospital stay. According to Medicare, a qualifying hospital stay is an inpatient hospital stay of three consecutive days or more starting with the day the patient is admitted to the hospital as an inpatient; but, does not include the day a patient leaves the hospital.

A 2010 report published by the National Institute of Health showed a sharp rise in Medicare enrollees being held in hospitals for observation rather than being admitted.   Medicare regulations define observation care as “specific, clinically appropriate services which include ongoing short-term treatment, assessment, and reassessment that are furnished while a decision is being made regarding whether a patient requires further treatment as a hospital inpatient or if they are able to be discharged from the hospital.”[/vc_column_text][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_column_text]

The 2010 study was significant for three very important reasons. Firstly, it clearly confirmed an increase in this practice was occurring nationally. Secondly, it confirmed not only had the number of patients placed under observation increased; but, the number of days patients remained in such status was also on the rise. Finally, the report drew much needed attention to a looming controversy that could have a significant impact on the nation’s vulnerable elderly—how their hospital stay is counted.

In 2013, the American Association of Retired Persons (AARP) published another report. It expanded the study period and exposed even greater increases in both the frequency and duration of patients placed in observation status.[/vc_column_text][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_column_text]The specific cause for the change has remained elusive though speculation was abundant. It included changes in Medicare payment policy. Some claim there are efficiency advantages for hospitals relative to placing patients in an observation status over inpatient admission. Others have pointed to increased reporting requirements and incentives to reduce hospital admissions by increasing observation status use to avoid readmission penalties. Penalties for readmission became effective in 2012.

Although the new bill at least requires patients be notified when they are placed on observation status it falls far short of resolving seniors’ greatest concerns that include having the observation days count toward the three day admission requirement necessary before Medicare will cover a stay in a skilled nursing facility.  It also does nothing to reduce cost-sharing requirements that apply to outpatient services that are normally higher; nor, does it provide any formal option for patients to petition the hospital or Medicare to have their status changed once a patient learns he/she was placed on observation status. The effective date of the NOTICE bill is pending.

To view the 2013 Report by the AARP Public Policy Institute visit: AARP Report

Words by: S. E. Williams

Images by: Glyn Lewis and Jose Luis[/vc_column_text][/vc_column][/vc_row]